Time of the year to look at product range

Press, 9 February 1983, Page 30

Time of the year to look at product range

This is the month when retailers and manufacturers should look at what they make or what they sell: the product range, or lines of goods, or services offered. The sales of each product should be reviewed, for 1980. for 1981, and for 1982. It does not matter whether value or number of items is used provided that there is consistency. Apart from noting whether sales of each product, or line, or service, are increasing or decreasing, the small-busi-ness owner should look at each item's profit contribution. as a percentage of total gross profit. The total range of lines and products should be considered from the viewpoints of the mix. the price range, the size of units, and market demand. Competitors’ ranges should be taken into account, especially products that are not contributing much towards gross profit. Look for any gaps in the business's range. It may be that a completely new range is needed, or perhaps some products need to be dropped.

Introducing a new product to the shelf may take a retailer six months. Introducing it to a manufacturer’s range may take as long as 18 months. The retailer may look for a new source of supply, reviewing what is on offer in New Zealand and overseas, but even then may have to negotiate the special manufacture of the lines. For the manufacturer, a new product starts from identifying a need in the market place. This could fall into the categories of:

© Renovation of an existing product. • Introduction of an existing product from overseas. © A completely new product. Manufacturers hoping to have a new product on the market by Christmas. 1983, should not delay in development. These are the basic steps: © Initial product design and engineering drawings. • An engineering proto-

type. This might be as simple as a cardboard or wooden model. Small manufacturers should not overlook this important step. • Tools and dies need to be developed and made. O The pre-production prototype should be made and off-tool samples taken. The product should be tested and tools adjusted.

• Costs should be estimated and initial pricing estimates made.

© Packaging should now be developed. This may need modification after tests to see how it will protect goods in transit.

• Take the product and do a market survey. Take it to some knowledgeable business people and get their opinion on pricing..

® Pricing should now be decided and advertising proposals considered. • Any final adjustments to tooling or packaging arising from the market survey should be made. • The manufacturer should schedule production and decide on raw material sources, reviewing cost and pricing estimates.

• The sales campaign should be taken through to the distributors, with details of deliveries and advertising. • Planning now must allow for distribution in sufficient time to ensure that stocks are available to the retailers to coincide with the advertising campaign.

For both retailers and manufacturers, the bringing of new products into the line lifts customer interest in the whole of the firm's range. It is also a chance to weed out less profitable items. The price freeze gives new goods an additional advantage. They allow- the small business to recover the full margin of profit, because they are not subject to freeze regulations.

The freeze allows the firm to obtain only the extra dollar costs in price rises: the margin thus must fall if the price increase is granted. Finding a new product may mean a trip to the North Island for the retailer. It is also a time-consuming task for the manufacturer, but one that must be done. Adequate time-tabling and planning can make it much easier.